Sluggish European Economy Slows Chrysler’s Reach

Chrysler CEO Sergio Marchionne’s plans to expand the U.S. auto maker’s global reach in exchange for returning some Fiat brands to America were conceived without the help of a crystal ball to forecast Europe’s economic state.

Now that times are tough across the pond, Chrysler is tinkering with its plans to work with its Italian parent company to stay the course. The Jeep brand continues to be the auto maker’s global ambassador, with rebadged Dodge and Chrysler vehicles adding to the company’s presence outside the U.S.

Mike Manley, head of Chrysler’s International Sales Operations and president and CEO of Jeep, speaks about the company’s future plans in an interview via email with WardsAuto.

WardsAuto: What is your outlook for the European market in 2013, and how will it affect your business performance?

Manley: The Jeep brand is our truly global brand and dominates Chrysler Group’s European and global sales, so I will answer this question from that perspective. So far this year, while the market in Western Europe is down around 7%, (the) Jeep brand is up almost 30% in the region.

With the difficult economic conditions in Europe, passenger-car volumes in 2013 are expected to remain flat, and the SUV segments in which Jeep products compete are forecasted to decline.

However, we are working hard to ensure that (the) Jeep brand will continue to grow its volume and market share in 2013 with fresh products that fit the needs of European consumers and a distribution network that has increased during the last year as a result of the alliance with Fiat.

WardsAuto: Do you see the need to increase, decrease or maintain your global manufacturing capacity in the coming year? Which market segments are ripe for expansion?

Manley: Chrysler Group has reached full capacity in virtually all of its plants, and we made a commitment to grow our international business to 500,000 units by 2014. So, it is more important than ever that we look at additional options. We will work with our Fiat partners to find manufacturing efficiencies and opportunities wherever they make sense. For example, we are currently investigating production and distribution possibilities in Russia and China.

Two of the fastest-growing SUV segments in the world are the small (B) and compact (C) SUV segments. (The) Jeep brand is positioned to capitalize on that trend, with new Jeep vehicles for the B-, C- and D-segments to be introduced over the next two years.

WardsAuto: What sort of challenges remain in globalizing product platforms?

Manley: To be globally competitive in the automotive industry, you need to achieve economies of scale by utilizing shared components and platforms, but still make sure that the vehicles cater to the needs of specific markets from an interior, powertrains and performance standpoint.

The all-new Dodge Dart is a great example of that.This is the first Chrysler Group vehicle built on a Fiat Group architecture and it fits absolutely well in the U.S. market while, under the Alfa brand, the car is perfect for European needs.

It is important to note that there are other challenges in globalization, such as regulations, foreign exchange rates, taxation and duties that are over and above the discussion about architectures and components.

WardsAuto: Rank the top five emerging markets. How has the list changed since 2009?

Manley: China is Chrysler Group’s largest market outside North America, and we are seeing some of our highest growth rates in Australia, Brazil, Russia and the Middle East region.

In China, Jeep was the fastest-growing mainstream brand in 2011 and, so far this year, remains No.1 in growth, up 126% year-over-year. These markets will continue to be important for Chrysler Group going forward.

We are also investigating every possibility for growth in Southeast Asia and India. Clearly, we are seeing the rise in importance of Asian and Latin American markets. Both regions are projected to see passenger-car volumes climb over the next four years.